Vecima Reports Q2 Fiscal 2014 Results
Cash Balance of $36.5 Million after Distributing $22.3 Million
VICTORIA – (February 12, 2014) – Vecima Networks Inc. (TSX:VCM), an experienced designer and manufacturer of innovative technology in the broadband equipment market, today reported financial results for the three months ended December 31, 2013. “Vecima delivered another quarter of strong financial performance in Q2 as we continued to provide market leading business services solutions that our customers use to implement new network architectures that better serve their cable subscribers,” stated Sumit Kumar, President and CEO. “The Company completed a special cash distribution of $1.00 per common share in late December. After the distribution, we concluded the calendar year with $36.5 million in cash and marketable securities far exceeding our target of $28 million. Vecima maintained healthy profitability with Adjusted EBITDA growing from $4.5 million to $4.9 million. We remain confident in our ability to generate solid financial performance from operations.”
MSO BUSINESS SERVICES
- Sales in the second quarter were $6.6 million. The fact that cable operators will need to transition to all-digital networks is proven in the industry. With the lead customer in its fifth year of conversion, sales to that customer are starting to gradually decline though recently approved new variants are expected to extend the life cycle. Results for this product family are expected to be driven by the addition of new MSOs beginning their all-digital conversions and Vecima is well positioned to drive additional sales of Terrace proportionate to the size of the MSO.
- In the second quarter, a new MSO customer increased its uptake of Terrace products to facilitate the all-digital transition that they initiated in Q1 FY2014.
- Sales decreased slightly from $5.5 million in Q1 to $5.3 million in Q2. As indicated last quarter, sales are expected to moderately decline and then level off as the initial deployment ramp at the lead customer is behind us. That customer expects to launch new sales programs within the hospitality industry in calendar 2014. A second major customer for Terrace QAM has undertaken a reprioritization of capital expenditures in the short term. While hospitality is a new and lucrative market segment for cable MSOs, spending initiatives to grow this market are sometimes vying for the same capital dollars that are required to compete to maintain and grow cable subscribers in traditional markets.
Digital Video Access Platform
- This product interfaces with a wide range of subscriber products, including numerous legacy devices. As a cable headend product is progressed through field testing and final approval at lead cable MSO customers, it is not uncommon for requirements outside the agreed specifications to emerge that must be addressed in practice. In this past quarter, the ramp in sales of this platform was deferred while the software was being refined to address those network issues. All indications show that, once final approval is achieved, a very strong market need and pent up demand is present.
“We maintain a strong balance sheet and are well positioned to prudently invest in the design and development of next generation platform solutions within the cable network infrastructure marketplace. As market dynamics shift, transitions in the types of technologies required to support enhanced services will enable an agile company, like Vecima, to capitalize on new opportunities,” said Sumit Kumar.
A conference call and live audio webcast will be held on February 12, 2014 at 1 p.m. ET to discuss the Company’s second quarter results. Vecima’s unaudited condensed interim consolidated financial statements and management’s discussion and analysis for the three months ended December 31, 2013 are available under the Company’s profile at www.sedar.com, and at www.vecima.com/financials. To participate in the teleconference, dial 1-800-319-4610 or 1-604-638-5340. The webcast will be available in real time at services.choruscall.ca/links/vecima140212.html and will be archived on the Vecima website at www.vecima.com/shareholder-events.
About Vecima Networks
Vecima Networks Inc. (TSX:VCM) designs, manufactures and sells products that enable broadband access to cable, wireless and telephony networks. Vecima’s hardware products incorporate original embedded software to meet the complex requirements of next-generation, high-speed digital networks. Service providers use Vecima’s solutions to deliver services to a converging worldwide broadband market, including what are commonly known as “triple play” (voice, video and data) and “quadruple play” (voice, video, data and wireless) services. Vecima’s solutions allow service providers to rapidly and cost-effectively bridge the final network segment that connects the system directly to end users, commonly referred to as “the last mile”, by overcoming the bottleneck resulting from insufficient carrying capacity in legacy, last mile infrastructures. Vecima’s products are directed at two principal markets: Converged Wired Solutions and Broadband Wireless. The Company has also developed and continues to focus on developing products to address emerging markets such as Voice over Internet Protocol, fibre to the home and IP video. More information is available at our website at www.vecima.com.
Certain statements in this press release may constitute forward-looking statements within the meaning of applicable securities laws. All statements other than statements of historical fact are forward-looking statements. These statements include but are not limited to statements regarding management’s intentions, belief or current expectations with respect to market and general economic conditions, future sales, future shipping volumes, future cash position, revenue expectations, future costs, future operating performance, plans to sell non-core assets, and plans to continue to explore opportunities to maximize shareholder value, including the possibility of future cash dividends and distributions. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict, and/or are beyond our control. A number of important factors could cause actual outcomes and results to differ materially from those expressed in these forward-looking statements. These factors include, but are not limited to, the current significant general economic uncertainty and credit and financial market volatility and the distinctive characteristics of Vecima’s operations and industry and customer demand that may have a material impact on, or constitute risk factors in respect of Vecima’s future financial performance, as set forth under the heading “Risk Factors” in the Company’s Annual Information Form dated September 26, 2013, a copy of which is available at www.sedar.com. In addition, although the forward-looking statements in this press release are based on what management believes are reasonable assumptions, such assumptions may prove to be incorrect. Consequently, readers should not place undue reliance on such forward-looking statements. In addition, these forward-looking statements relate to the date on which they are made. Vecima disclaims any intention or obligation to update or revise any forward-looking statements, as a result of new information, future events or otherwise, except as required by law.
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